HONG KONG, March 24 (Xinhua) -- The U.S. government's plan to buy up banks' toxic assets is badly flawed, exposing American taxpayers too much risk and may not work effectively, Nobel Prize-winning economist Joseph Stiglitz said here on Tuesday.

    "It's really a very bad program," he said.

    U.S. Treasury said on Monday it would launch a plan with 75 billion to 100 billion U.S. dollars from existing financial rescue funds to rid banks of toxic assets, aiming for economic recovery.

    The plan offered "perverse incentives", simply moving bad assets away from the banks to the U.S. taxpayers, with hedge funds getting to keep the upside risks and the American taxpayers getting the downside, the 2001 Nobel laureate said in the keynote discussion during a Credit Suisse Asian Investment Conference in Hong Kong.

    Stiglitz, a professor at Columbia University and a former World Bank chief economist, then offered an option for American government to "temporarily nationalize" those banks that are undercapitalized.

    "They should be restructured and re-sold," Stiglitz said, stressing that U.S. government should focus on the good banks and leave the bad assets off to private investors, for the troubled banks have made bad decisions and got their returns in earlier years.